US ruling on solar panels to escalate trade conflicts

By Liang Fei Source:Global Times Published: 2014-6-5 0:43:01

The Chinese government, solar companies and trade associations Wednesday expressed strong discontent over a preliminary US ruling to impose new countervailing duties on Chinese solar products, saying that the move will ramp up trade conflicts.

The US Department of Commerce (DOC) announced Tuesday that after an investigation, it concluded that Chinese solar products were subsidized by the Chinese government which has damaged the interests of US solar producers.

According to WTO rules, a nation can impose countervailing duties, or anti-subsidy duties, to level the playing field between foreign and domestic producers if government subsidies are being received.

In a preliminary ruling, the DOC decided to impose duties of 35.21 percent on imports of solar products from Wuxi Suntech Power Co, 18.56 percent on imports from Changzhou Trina Solar Energy Co and 26.89 percent on imports from other Chinese producers.

"Restrictions the US imposed on Chinese solar producers are an abuse of trade remedy measures … and will surely escalate trade conflicts between the two countries in the solar sector," China's Ministry of Commerce (MOFCOM) said in a statement posted on its website on Wednesday.

Based on a petition from the US unit of German solar manufacturer SolarWorld AG, the current investigation was initiated on January 22. Merchandise covered by this investigation includes crystalline silicon photovoltaic cells, modules and other related solar products, the DOC said.

A preliminary ruling on anti-dumping duties is expected to be announced in July. Both the DOC and the International Trade Commission need to make final rulings in favor of SolarWorld before the duties are finalized.

Wu Hui, a manager at Wuxi Suntech's sales department, said in an e-mail sent to the Global Times Wednesday that they think the preliminary ruling is unfair and disagree with the US accusation that the company is in receipt of government subsidies.

The China Chamber of Commerce for Import and Export of Machinery and Electronic Products also said in a statement on Wednesday that the DOC preliminary ruling is irresponsible and has damaged the interest of Chinese companies.

The current investigation is the second major US anti-dumping and countervailing probe into Chinese solar products.

The first was in 2012, when the US imposed an anti-dumping duty of up to 249.96 percent and a countervailing duty of up to 15.97 percent on Chinese solar companies.

In 2013, US imports of certain crystalline silicon photovoltaic products from China were valued at an estimated $1.5 billion, according to the DOC.

Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under MOFCOM, said the US has put its own interest before the principle of fair competition.

"It [China's solar industry] is a highly competitive market," Bai told the Global Times, noting that low cost and economies of scale are the reasons behind the competitive prices of Chinese products.

Experts and industry insiders noted that to pose hefty duties on Chinese companies does not necessarily benefit US companies.

"The ruling is a major setback for the entire US solar industry because it will immediately increase the price of solar power and cost American jobs in one of the fastest-growing sectors of the US economy," US industry organization Coalition for Affordable Solar Energy said in a statement.

"Frequent trade remedy measures can't resolve the problems of the US solar industry. [We] hope that the US could deal with the investigation in a cautious manner and end the investigation as soon as possible," MOFCOM said in the statement.

Wang Zhao, a general manager at solar technology company Jiangsu Hammond Power Co, said that the Chinese solar industry has already been hit hard by the first round of anti-dumping and countervailing duties and the current duties, if finalized, will make the situation even worse.

"Many small solar companies have gone bankrupt in the past two years and market leaders are not operating at full capacity," Wang told the Global Times.

Solar companies from some Southeast Asian nations, Japan and India have started to sell their products in the US instead, he said.

Products from Taiwan are also subject to the investigation this time, which also means a challenge to the solar companies in the Chinese mainland. "Many mainland companies have turned to contract manufacturers in Taiwan or South Korea in order to avoid the hefty duties posed by the US," Wang said.

Mainland solar firms are turning to the domestic market, or choose to build plants overseas, as the export environment is becoming unfavorable.

India last month also slapped anti-dumping duties on solar panels imported from China.